Northern Ireland's agricultural industry will lose out on £20m worth of European money this year as a result of the troubles in the Eurozone banking system.

The woes of Greece, Spain and Italy have forced down the value of the euro and in turn eroded the value of the Single Farm Payment (SFP), an annual subsidy paid to UK farmers from Europe.

The SFP has to be converted from euros to sterling to pay UK farmers and is set against the European Central Bank euro exchange rate on the last day of September which this year was just under 80p, a sharp fall on the 87p rate used last year.

That means that Northern Ireland's farmers will get a total of £245.4m in payments this year, down from £266.5m in 2011. The payment is based on the amount of land a producer farms and equates to around £256 a hectare, according to the Department of Agriculture and Rural Development (DARD), down from £278 a hectare last year.

The payment fall comes after several years where the euro strengthened against the pound in September, boosting the SFP.

Ulster Farmers Union President Harry Sinclair conceded that the exchange rate had gone in farmers' favour over the last few years but was disappointed.

"It remains our view that the payment system should be changed so that farm incomes are not as exposed to exchange rate fluctuations," he said. "The current system of using a single date is flawed because it leaves farmers more exposed to the daily fluctuations in the money markets.

"It would clearly be preferable to at least see the average exchange rate for an entire month used to establish the figure."

Ashley Clarkson, Associate Director and agricultural expert at business advisors Grant Thornton, said the implementation of the Common Agricultural Policy in 2015 could simplify the SFP but was unlikely to do away with the need to peg payments for non-eurozone countries against the euro/sterling exchange rate.

He said the fall in the SFP won't be welcome by the farming community.